Despite weak coal business and strong comparisons from record-setting financial performance in the year-ago period, Norfolk Southern Corp. registered a good first quarter, Chairman, President and Chief Executive Officer Wick Moorman said during the Class I's earnings conference yesterday afternoon.
NS earned all-time-best net income and posted its second-best ever revenue, operating income, income from railway operations and earnings, Moorman said. Net income — which included $60 million from a property sale — rose 10 percent to $450 million compared with first-quarter 2012.
Railway operating revenue declined 2 percent to $2.7 billion, income from railway operations decreased 7 percent to $691 million, operating expenses remained flat at $2 billion and the operating ratio increased 1.5 points to 74.8, NS' second-best Q1 mark. Volume rose 3 percent to 1.78 million units.
The first-quarter results "illustrate our diverse customer base, superior operating performance, productivity initiatives and expense controls," said Moorman.
"The big story for the quarter was the quality of our service. The composite service index improved 50 basis points over last year to 83.3 percent and system average speed was 24.2 miles per hour, a 3 percent improvement," he said. "This increased velocity created additional capacity, and our network is running as fluidly as I have ever seen it."
In terms of revenue per commodity segment, general merchandise revenue rose 2 percent to $1.5 billion, intermodal revenue climbed 9 percent to $573 million and coal revenue fell 17 percent to $635 million. Coal business was hampered by a 14 percent drop in domestic metallurgical volume that supports steel production and a 9 percent decline in utility volume.
Looking ahead, coal continues to be a wild card, but there are some signs of stability, including gas and metallurgical coal prices, said Moorman.
"In general, we see an economy that will continue to grow, albeit at a slow pace," he said. "We believe that superior service, going hand-in-hand with a focus on safety and operating efficiency, are the best ways to grow our volumes and revenues. We're confident in our strategy and our ability to execute it, and our first quarter results are a strong indication that it's working."
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